The Colorado Supreme Court Tuesday heard a case that highlights the clash between state laws that are increasingly accepting of marijuana use and federal law. Brandon Coats, right, a quadriplegic medical marijuana patient, was fired by the Dish Network after failing a drug test four years ago.

Kathryn Scott Osler/The Denver Post/AP

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Boulder, Colo.

Marijuana may be legal under Colorado law, but that doesn't necessarily mean Coloradans can't suffer consequences for using it.

On Tuesday, the Colorado Supreme Court heard arguments in a case getting widespread attention that tests what employment protections marijuana users have. The court will rule on whether someone legally – based on state law – using marijuana in off-duty hours can still be fired by an employer with a zero-tolerance drug policy.

It's a case that highlights the murky legal status of a substance that remains illegal federally even as a growing number of states legalize its use in certain instances, and the confusion that can result when state and federal laws clash.

"As long as marijuana remains illegal at the federal level, states trying to legalize it will not be able to eliminate all negative consequences" for people who use it, says Sam Kamin, a law professor at the University of Denver and an expert on marijuana regulation.

In the case before the state Supreme Court, Brandon Coats, a quadriplegic who has been a medical marijuana patient since 2009, was fired by Dish Network four years ago after failing a company drug test. Dish has a zero-tolerance drug policy for employees.

Mr. Coats, who says he's had difficulty finding steady work since the termination, says he only used pot in off-duty hours and was never impaired at work. His lawyers argued that his marijuana use – legal under Colorado's law – should be treated like alcohol or any other legal substance. And Colorado's Lawful Activities Statute, they say, protects employees from being punished for legal, off-duty behavior.

But lawyers for both Dish and the state argue that "lawful" is not confined to state law, and marijuana use – whether medical or recreational – remains illegal under federal law. Last year, the state's court of appeals agreed with that argument, and ruled in favor of Dish Network.

"Federal law is the supreme law of the land," says Vance Knapp, a Denver labor and employment lawyer who has expertise in employers' drug policies."That's the 800-pound gorilla in the room.

"The bottom line is that the federal government has directly taken affirmative steps to make marijuana illegal under federal law."

Mr. Knapp, like most observers, expects that the Supreme Court will uphold the appeals court ruling and rule against Coats. Supreme Courts in three other states – California, Montana, Oregon, and Washington – all have ruled against fired employees in similar cases.

But the issue highlights the many conflicts that arise when state and federal law conflict. While the Justice Department has chosen not to enforce federal law in states that have legalized marijuana use so far, that's by choice, not necessity. The fact that the substance remains illegal federally has put a severe strain on marijuana businesses who aren't able to use banks for normal business practices. And users face uncertainty about whether they could lose federal student loans, or a federally subsidized apartment, or parole status, notes Mr. Kamin.

"We're moving toward a place where most citizens live in a place where marijuana is legal for some purposes," says Kamin. "They’ll be unclear what their rights are."

In this particular instance, Kamin adds, the Colorado legislature could choose to amend the employment statute in question – which was created before Colorado legalized marijuana – to state that employees can't be punished for legal off-duty marijuana use. Some other states, like Arizona, have written such protections for employees into their marijuana laws. But not all the contradictions are so easily fixed.

Currently 23 states, including the District of Columbia, have legalized the use of medical marijuana, and Colorado and Washington have legalized recreational use. Three more states have some form of marijuana legalization on the ballot this November.

Knapp says that a ruling in favor of Coats would throw employers into total confusion, and lead to massive amounts of litigation from employees. But he also wonders whether the increasing success of state-level legalization campaigns will put pressure on Congress to relax federal laws.

And this particular case has implications well beyond Colorado.

"This is a case obviously that is going to be watched nationally," says Knapp.